Morning Minutes 10/30/2020

Morning Minutes

Stocks Sink as Investors Digest Earnings and Economic News

October 30, 2020

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

The last trading day for the week and the month finds stock markets, particularly in the US, giving back Thursday’s gains. While the ongoing political and economic concerns related to COVID Wave 2 and Tuesday’s US election still hover ominously in the background, today investors appear to be mainly focused on the flood of earnings which came out overnight from several senior technology companies.

Investors responded negatively to several earnings reports from several senior technology and social media stocks overnight. Apple* is down 4.3% premarket as investors focused more on disappointing iPhone sales in the quarter ($26.4B vs street $27.9B) than slightly better than expected EPS ($0.73 vs street $0.70). Investor concerns appear to be circling around managements decision not to issue guidance for the current quarter and current new iPhone 12 launch. Twitter has been hammered down 16.2% in premarket trading with investors focusing more on weaker than expected user numbers (187M vs street 193M) than stronger than expected earnings. ($0.19 vs street $0.06).

The response to other headline technology related earnings reports has been neutral to slightly positive. Alphabet is up 6.5% premarket after beat expectations ($16.40 vs street $11.29), while Amazon.com* ($12.37 vs street $7.41), Facebook ($2.72 vs street $1.91), and Activision Blizzard ($0.71 vs street $0.65) are all down slightly premarket despite beating expectations on earnings.

Results from two oil giants were not as bad as feared. Chevron turned (-$0.18 vs street -$0.27) a surprise profit ($0.11 vs street -$0.27), while Exxon Mobil reported a smaller than expected loss. Several companies in other sectors also have reported today including Starbucks ($0.51 vs street $0.31), and Honeywell ($1.56 vs street $1.49).

As investors digest all of these developments, US index futures are down 1.0%-1.2%, giving back most or all of yesterday’s 0.5% to 1.6% gains. Declines in Europe have been smaller with the FTSE down 0.4% and the Dax down 0.6% with a stronger than expected bounce in Eurozone Q3 GDP (12.7% vs street 9.4%) providing a cushion.

US personal income (0.9% vs street 0.4%) and US personal spending (1.4% vs street 1.0%) both exceeded expectations in September. US Chicago PMI (street 58.0 vs previous 62.4) due at 9:45 am EDT may provide a preview for Monday’s national Manufacturing PMI number.

 

*Shares of Apple, and Amazon.com are held in some portfolios managed by SIA Wealth Management.

 

New Video: Market Commentary and Portfolio Strategy – October 28, 2020

With Jeremy Fehr – Founder and CEO of SIA Wealth Management and Jason Leesui, Executive Vice President of SIA Wealth Management

A new webinar replay is available featuring Jeremy Fehr discussing current trends in world markets, and Jason Leesui discussing portfolio strategy. A PDF version of the presentation is available.

GoToMeeting Version: https://attendee.gotowebinar.com/recording/2214725791708752396

YouTube Version: https://youtu.be/V300GLmiSQM

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